'Bipartisan' Does Not Inherently Mean 'Good'

You may have missed it in all the sturm und drang down at Camp Runamuck, but, in the Congress, the first teaser-trailer for the 2020 Democratic Primary Elections was released Tuesday. The Senate passed a procedural vote concerning a bill that would substantially weaken the Dodd-Frank restrictions that were placed on the American financial industry in the aftermath of that industry’s highly successful campaign to sell off the world economy for parts. The vote to proceed with the measure was a very rare example of bipartisan cooperation, 67-32; the bill has 12 Democratic co-sponsors, many of them facing re-election this fall.

The Democratic support for the bill is based on the perception that the Dodd-Frank regulations fell too heavily on small banks, many of them in rural areas, causing a credit drought. Which is why Democratic senators like Jon Tester of Montana, who is up for re-election in November, have signed onto the bill. From The New York Times:

The bipartisan bill, which was drafted in the Senate Banking Committee over several years, would let hundreds of smaller banks avoid some federal oversight such as stress tests, which measure a bank’s ability to weather an economic downturn. Currently, banks with $50 billion of assets are considered “systemically important” and are governed by stricter rules. The bill would raise this threshold to $250 billion, meaning that only a handful of the biggest banks would face the toughest oversight.

And thereby hangs the tale. The progressive caucus within the Democratic minority in the Senate—led by Sherrod Brown of Ohio and Senator Professor Warren—is resolutely opposed to the kind of rollback central to this legislation. They see—and in my opinion, rightly—that this is the very big nose of a very big camel under the tent. From MassLive:

Warren stressed that she's "going to keep pushing for changes in the legislation," adding that she has more than a dozen amendments she plans to offer to improve the bill. They include language that would impose mandatory penalties on companies like Equifax when they lose consumer data or prohibit rolling back the rules on any big bank that got more than $1 billion in bailout money after the 2008 crash. "The way I see it, is that people in this building, they forget the devastating impact of the financial crisis 10 years ago, but the American people have not forgotten," she said. "The American people remember. The millions of people who lost their homes, the millions of people who lost their jobs, the millions of people who lost their savings: they remember and they do not want to turn loose the big banks again." Congress, she argued "should listen to the American people and refuse to pass this bill."

Already, the framing of the debate is running in the opposite direction. The bill is being praised as being “bipartisan,” which is considered in much of the elite political press to be a laudable goal in and of itself, which is assuredly one of the dumbest tropes in our politics. The idea there is a prima facie national benefit in having senators from both parties agreeing to a dubious policy is almost childlike in its view of history.

Jon Tester

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All of those “compromises” of the early- and mid-19th century did nothing but delay the inevitable cataclysm over slavery. Support for Jim Crow often was “bipartisan,” as was the foreign adventurism that overthrew governments in places like Iran and Guatemala and that reached its bloody apex in Vietnam. The panic that produced the Patriot Act after the 9/11 attacks was bipartisan, as was the support for the war in Iraq for which that panic was exploited by a bunch of think-tank cowboys. More to the point, a lot of the measures that led to the financial collapse that led to the regulations now under assault were quite bipartisan. To say something is to be praised simply because it is something that “got done” in our “polarized age” is a simpleton’s view of politics.

Moreover, most accounts of the bill have labeled it a debate between “liberal” Democrats and “moderate” Democrats, which is utterly absurd. Heidi Heitkamp of North Dakota, another of the bill’s Democratic supporters, is not a “moderate” Democrat. She’s a conservative Democrat, as is Joe Donnelly of Indiana. It’s hard to imagine what a Democratic senator would have to do to be labeled “conservative” these days.

Heidi Heitkamp

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This piece from Politico is a perfect example of what I mean. The bill is framed here as a defeat for SPW. Heidi Heitkamp is a “moderate” Democrat. It was “centrist” Democrats who were negotiating with Mike Crapo, beneficiary of almost $900,000 in campaign contributions over the past five years from the securities and investment industries. There’s even a subtext in which this “compromise” is seen as a defeat for SPW in a presidential campaign that hasn’t even been launched yet, which is silly.

One thing that does not appear in the piece is an analysis of the merits of the damn bill. To my mind, it’s a compromise that benefits the financial industries far more than the individual consumer. A compromise as described by Politico seems to me to be a real sucker’s bet, especially knowing what we know about how the masters of the universe operate.

The bill would make numerous changes to safeguards sitting between lenders, consumers and the broader economy. Among the provisions: Easier mortgage regulations for small banks; new exemptions from tougher oversight for regional banks with $50 billion to $250 billion in assets; a directive to the Federal Reserve to tailor its rules for large banks and relaxed capital and liquidity requirements for some of the nation's biggest financial institutions. The legislation includes a handful of consumer protection measures that critics have panned as an insufficient trade-off for the regulatory rollbacks in the bill.

One is a proposal pushed by Delaware Democrats Tom Carper and Chris Coons that would require free credit monitoring for military members. The provision has rankled credit-reporting agencies that will be forced to offer millions of dollars worth of free products, as well as conservatives such as Grover Norquist of Americans for Tax Reform, who has complained to Crapo that the proposal would expose the credit-reporting companies to "new liability which the trial bar will certainly try to exploit."

Why, in the face of the crimes of Wells Fargo, anyone would agree to “numerous changes” in safeguards regarding the nation’s biggest financial institutions is beyond me, as is the concern for the delicate sensibilities of the credit-reporting companies in the face of the disaster that is Equifax, the investigation of which the administration* has decided to put on ice. This bill smacks too much of ignoring the primary lesson of the previous meltdown: that the essential resting pulse of the American financial system is fraud, and that any daylight given to that conglomeration of thieving plutocrats will be exploited in ways we cannot envision right now.

And, in any event, the debate should be on those terms, and not in terms of the 2020 horse race, or in terms of, god help us, “reaching across the aisle.” Experience should teach us that “reaching across the aisle” in this particular area is usually a method for picking our pockets.

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